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THQ Files For Chapter 11 Bankruptcy; Stock Plunges - Quick Facts

THQ Inc. (THQI) announced Wednesday that the company and its domestic business units have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Court for the District of Delaware. The company said that its foreign operations, including Canada, are not included in the filings. The company said it has obtained commitments from Wells Fargo and Clearlake for debtor-in possession or DIP financing of approximately $37.5 million, subject to Court approval.

The company also announced that it entered into an Asset Purchase Agreement with a "stalking horse bidder," affiliates of Clearlake Capital Group, L.P., to acquire substantially all of the assets of THQ's operating business, including THQ's four owned studios and games in development.

The company said that the sale will allow it to shed certain legacy obligations and emerge with the strong financial backing of a new owner with substantial experience in software and technology.

The company added that it will continue operating its business without interruption during the sale period, subject to Court approval of THQ's first-day motions. All of the company's studios remain open, and all development teams continue. As part of the sale, the company is seeking approval to assume the contracts of these studios, and Clearlake will assume these contracts.

Clearlake has agreed to serve as the "stalking horse bidder" for a Section 363 sale process, which allows other interested parties to come forward with competing bids. Aggregate consideration offered by Clearlake for the purchase totals approximately $60 million, including a new $10 million note for the benefit of the company's creditors. The company is asking the Court for a schedule to complete the sale process in about 30 days.

The company noted that the new financing will support business operations throughout the period. THQ does not intend to reduce its workforce as a result of the filing, and employees will continue to work their usual schedules and receive normal compensation and benefits, pending customary Court approval.

THQI is currently trading at $0.51, down $0.87 or 63.04%.

by RTT Staff Writer

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